From Broke to Financially Woke – The Incredible Cash Dummy
Today, I am excited to share with you the latest interview in the From Broke to Financially Woke series! The purpose of this series it to give hope to those struggling to escape from the not so secret group Broke Phi Broke. A group whose chant is, “We ain’t got it. Broke, Broke, Phi Broke! We ain’t got it. Broke, Broke, Phi Broke!”
To help me accomplish this goal, I have invited the best and brightest of the financial independence community here to share their stories. As you read their interviews, pay close attention to the mistakes they made. Take mental note of the success principles they used to turn things around.
When trying to apply these principles to your own life, realize that success in life is rarely linear. You will encounter some struggles. But stay persistent. Keep moving forward.
Our special guest today is Andrew from the Incredible Cash Dummy. I connected with Andrew at FinCon last year. If you read my article about my FinCon experience, then you’ll remember me saying that our stories are very similar in that we made a lot of financial mistakes and now we are turning things around!
Let’s see what specific mistakes Andrew has made and how he is taking control of his financial life…
Introduce yourself. Where do you blog? What are some of your interests outside of financial independence?
My name is Andrew and I blog (occasionally) at The Incredible Cash Dummy. Before I got into personal finance my hobbies centered mostly around video games, movies and gadgets. I’ve also been a drummer for most of my life. I LOVE music; playing it, listening to it, watching it performed live, you name it.
Tell us about a time where you were a member of Broke Phi Broke. How did living paycheck to paycheck make you feel as a person? At your lowest point, how much debt did you have?
So we were living paycheck to paycheck until a few months ago, and even now we’re only just barely getting ahead. At our worst we had almost $15k in credit card debt between my wife and I, which I know isn’t much compared to some but the high interest rates were killing us. We made a huge amount of progress from 2017-2018 in paying down our debt but we ran into some setbacks a few months ago that ran it back up to about $10k. The paycheck-to-paycheck cycle has caused more fights between is than anything else because of the constant stress, wondering if we’ll be able to make it to the next payday… it severely eroded our confidence.
We initially made the choice to direct as much money as we could spare into the credit cards to pay them down as quickly as we could, but we did so at the expense of building up our emergency fund first so we felt the pain there. We’ve got our emergency fund set now though, and are on track to eliminate all of our credit card debt within the next two years (or less, if I can hustle enough on the side with my freelance proofreading/editing business).
What are some of your biggest financial mistakes?
The biggest mistakes we made were getting complacent with our credit card usage, and buying our house so far away from where I work. Not paying close attention to our spending habits is what caused us to run up so much credit debt that’s digged us for years, and my daily 38 mile commute was costing us almost $400 a month in gas and tolls until I found my office van pool.
An honorable mention goes to dumping a bunch of money into our credit cards without first establishing that emergency fund safety net; because we didn’t have that to fall back on we had to take on more debt to cover several unexpected medical expenses, which undid much of the progress we’d made.
Describe your upbringing. Where did you grow up? What did your parents or teachers teach you about money?
I was born and raised in Greensboro, NC to a middle-class suburban family (I’m the oldest of four kids). My dad had a solid job with benefits and my mom stayed home with us kids until she went back to work when I was a teenager; we weren’t wealthy by any means but I don’t remember us ever feeling deprived growing up. I also don’t remember having any serious conversations about money.
My parents did try to teach me the rule about waiting a few days to a few weeks before making a purchase to stave off impulsive spending, and the importance of things like health insurance and eventually saving for retirement. But that’s about as detailed and specific as the conversations ever got. I never learned how to balance a checkbook, manage a credit card, invest my money, or anything else a personal finance enthusiast would consider “foundational knowledge”.
How important is becoming financially woke to you? What steps have you taken to increase your financial knowledge?
In my mind money is one of the most important things people need to know about in life, and yet too few people are taught how to manage it effectively (let alone take the initiative to teach themselves). All of the worst money mistakes I’ve made over the years were a result of ignorance; not knowing the right way to manage my finances rather than things like addictions, gambling, or “get rich quick” schemes. Money touches every aspect of our lives, so the more people know about how to manage it effectively the more control and freedom of choice they’ll have.
The first thing I did when I started actively learning about money was to read every book I could get my hands on. The first money book I ever bought was “The Automatic Millionaire” by David Bach, and it blew my mind with his ideas about the “latte factor” and how small changes on a day-to-day basis can produce huge results over time thanks to the power of compounding. “The Richest Man in Bablyon” by George Clason was another early favorite, I latched on to the foundational ideas about paying yourself first, investing with people who know what they’re doing, and having discipline (plus I dug the Shakespearean style). The other three books in my Top 5 are “Set For Life” by Scott Trench, “I Will Teach You to Be Rich” by Ramit Sethi, and “Financial Freedom” by Grant Sabatier because of their step-by-step approaches to cutting expenses, growing income, and investing for the future.
What are some of the key principles you have used to improve your financial life?
The single most important thing that people need to learn is to live within their means and not spend more than they earn. With credit so easily accessible this can be extremely difficult, especially for people who aren’t financially inclined or who don’t check their balances every day. Does it mean you can’t buy everything you want right when you want it? Absolutely. And this is a GOOD THING. It’s good for your money because you don’t waste it on frivolous purchases. It’s good for your quality of life because you don’t end up drowning in a home full of material possessions that you don’t need and that don’t add any real value to your life.
Once the overspending habit is broken, people can move on to building an emergency fund, then whittling down their high-interest debt. I’m a big fan of the “snowball” method in which you pay as much as you can on your highest-interest credit card and only the minimum on the rest until it’s paid off, then cycling the payment over to the next-highest-interest card until they’re all paid off.
How often do you consume personal finance information? Name 3-5 of your favorites sources (books, podcasts, blogs, etc.).
Ever since I got turned on to the personal finance community I consume money-related content on a daily basis. One of the first things I do when I roll out of bed every morning is check Twitter to see what new posts are out from the PF bloggers I follow (like this one!). I do that on purpose, because that way I’m starting every day with motivating, financially-responsible content at the top of my mind.
I’m a huge fan of podcasts as well. The Bigger Pockets Money Show was an early favorite and is still my #1 personal finance podcast. I also follow shows like Simple Minded Millennial Podcast with Steph and Erik from Mastermind Within, The FI Show with Cody and Justin from Fly to FI and Saving Sherpa, respectively, and a newer show called Birth of the Hustle by Joey Wilkes and Patric Moore. Joey is an old friend of mine that I served with in the military, he’s making some big moves in the entrepreneurial space and his show is great for people who are interested in side hustles and growing their income outside of their day job.
Where are you on the path to financial freedom now?
We’re still pretty early on our journey, we still have those pesky credit cards that we’ll have paid off soon and we’ve finally gotten back to a point where we have an emergency fund safety net and aren’t living hand-to-mouth in that paycheck to paycheck cycle anymore. I’ve also got about $50k set aside in my Thrift Savings Plan, which is like a 401k for federal employees.
Is there any advice you can give those who are struggling to escape Broke Phi Broke?
None of the progress we’ve made could happen until we realized we had a problem and started educating ourselves. The more you learn about and begin applying the foundational principles of managing money, the more control you’ll have and the less stress you’ll feel. The personal finance community has welcomed us with open arms; all the info you could ever need to know about saving, investing, retirement, real estate is out there, and these folks are more than happy to share what they know with you. All you have to do is ask!
How can the readers contact you?
The easiest way to catch me is on Twitter at @thecashdummy, I accept DMs so feel free to hit me up. I’m also reachable at email@example.com, and I have a Facebook page for my blog but I haven’t done much with that (yet!). I’m happy to chat any time!
Read more interviews in the From Broke to Financially Woke Series.
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Jerry is a Business Insider Contributing Writer who is obsessed with personal finance. He believes you can improve your financial situation by applying principles taught by the financial independence community to your financial life.
If you are having trouble saving, he recommends that you join the SaverLife Savings program where you can get a $60 reward after six months (no income requirement). All you have to do is put a minimum of $20 a month into a savings account. Easy, right?
For a fun read, check out his article 10 Signs You’re a Personal Finance Addict to see if you are a personal finance nerd.
Before you go, check out the new From Broke to Financially Woke Interview Series.
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